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Analysis of Launch Time in New Product Development With Risk Considerations

Sadat Sharifonnasabi, Zahra | 2009

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  1. Type of Document: M.Sc. Thesis
  2. Language: Farsi
  3. Document No: 39623 (44)
  4. University: Sharif University of Technology
  5. Department: Management and Economics
  6. Advisor(s): Sheikhzadeh, Mehdi
  7. Abstract:
  8. The importance of New Product Development (NPD) projects has been realized more and more in recent years. Among different decisions to be made in NPD process, one of the most critical decisions is about the best time to launch new product(s). Due to existence of many internal and external influential factors, determining the optimal launch time is often too complicated and it is quite hard to systematically analyze it. Despite risky nature of NPD, risk considerations in determining the optimal launch time have not been addressed in literature due to the mentioned complexity. In this research, we developed a model that takes in to account risk considerations while systematically determining the optimal launch time. This model can be applied to companies facing diminishing returns on product quality and market competition growing over time. In our model, we employed a stochastic Mean-Variance risk analysis introduced by Markowitz. The model is based upon maximization of expected firm’s profit subject to tolerable risk averseness coefficient. We demonstrate that having risk considerations can lead to totally different results. Specifically, some minimum level of capability in NPD process is needed as feasibility condition. At the lower levels of feasibility for quality of NPD process, the risk is monotonically increasing over time. However, if NPD process is sufficiently mature with high quality then risk will not be monotonically increasing over time, any more. Thus, depending on quality of NPD process and the competition situations optimal launch time could be earlier or later than optimal launch time of risk neutral models
  9. Keywords:
  10. Risk Analysis ; Product Development ; New Product ; Launch Time ; Mean-Variance Method

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